How to lose a customer in 78 words or less

How the message influences consumer behaviour.

Yesterday afternoon, while busy hunting insights, one half of Zeitgeist received an email from a popular gambling website. The reason they got in touch is that I hadn’t used my account for a year despite still having funds in it. Clearly a dormant customer doesn’t make them money so the idea of using the anniversary of my last bet as a excuse to engage with me makes sense. For a bookmaker, an active customer is almost always a source of guaranteed revenue. With the right message they could tempt me into a couple of bets and get some of that money into their own accounts.

However, instead of framing the situation as a great opportunity to enjoy some Christmas betting or offering me a free bet or bonus for using some of my funds before the end of the year the email made me feel like an inconvenience.

I’ll hide their identity, but the brief message was as follows

Dear Zeitgeist

We’ve noticed that it’s been a while since you’ve been active on xxx, so we thought we should remind you that you still have money in your account.

You should be aware that xxx administers an Inactive Account Fee on accounts that have been inactive for 13 months. As you have been inactive for at least 12 months, you’ll need to engage in activity on your account by the end of this month to avoid incurring the fee.

The tone is negative and looks like it was sent by a bank or utility company rather than an innovative gaming site. Instead of encouraging me to make a bet or offering me an incentive to start re-using the site, the message gave me the options of leaving the money there and incurring charges or withdrawing it all. The former makes no sense to me, the latter little sense to them.

Inevitably, with the expense of Christmas very much front of mind, I opted to withdraw the money and close my account. A welcome cash injection for me, but a lost customer that they’ll have to work hard to recover for them.

If only they had realised that the power of a poorly constructed email, as a call to action, was greater than millions of pounds worth of advertising.

Does anyone have any other examples of brands pushing customers away instead of encouraging them to come back?

The Art of Behavioural Economics

Much proverbial ink has been spilled on the coinciding of two events on September 16th, 2008. This was the day that, as Lehman Brothers collapsed, artist Damien Hirst made off with a cool £111m, “the largest single artist sale ever held” for his show Beautiful in my Mind Forever, according to the Wall Street Journal.

On Monday evening this week, the auction house Sotheby’s held an Impressionist and Modern Art sale, after a large article in the FT that weekend, detailing how the pieces to go on sale, which included a self-portrait by Edouard Manet (above), were expected to fetch record prices. This following recent all-time record sales, first of a Giacometti sculpture for £65m in February, which was then eclipsed three months later by a Picasso that sold for £72m.

The sale, which ended in the Manet being sold for £22.4m – a record for the artist – was not deemed a success. This morning on BBC Radio 4’s ‘Today’ programme, Sotheby’s representatives were quick to reference “unsophisticated buyers” from the Middle East, Far East and Russia; there was also vague talk of buyers looking for something that looked “like a painting for the 21st century”.

Looking at the sale holisitcally, which we can do purely in financial terms, it was an unqualified success. The result was seen as disappointing only because expectations had been raised considerably, based on – what? There was nothing to suggest that this sale would break major records, only the knowledge that certain pieces of art had recently been sold at high prices.

The problem then, a term used in behavioural economics, is one of anchoring. Behavioural economists disagree with classical economists’ view that people act on a rational basis. The anchoring rubric is a question of framing. In this case, because expectations had been raised artificially by recent news of record auctions, the sale at Sotheby’s was viewed as a disappointment, when in fact, in purely financial terms (i.e. “did the objects on auction meet and surpass their reserve?”), it was a success. In much the same way, the Hirst / Lehman Brothers coincidence is used to illustrate the robustness of the art market, irrespective of global financial turmoil. This framing fallacy concept is of course by no means exclusive to the high-end art world. In fact it can be found everywhere in the natural world as a way of helping judge the relative value or worth of an object, by positioning it relative to its peers. It is done in the supermarket every day to help consumers make a choice between peer products. The different prices and attributes anchor the shopper, giving them a relative understanding of the value of each product. Without this, a shopper would have no idea how much a product or feature was “worth”, or how the product sat on a hierachy with it’s competitors.